SA’s neighbours must weigh in on land expropriation
If farmers lose land and are not compensated this will negatively affect leveraged farming, thereby disrupting food security in the entire southern African region
The outcomes of the national election place one key question in the minds of all farmers — what are their likely effect on the expropriation without compensation debate? Having recently visited Luxembourg, where Agri SA represented the interests of the SA agriculture value chain at the World Farmers’ Organisation, I can safely say the rest of the world would also like some clarity, but for broader reasons.
Food security is not limited to the country or even a specific region, as SA provides a large percentage of the food consumed by the subcontinent. Should section 25 of the constitution again face amendment, it is not only SA farmers who face increased risk — the entire region is under threat of being destabilised.
Food security, as defined by the UN committee on world food security, means that all people, always, have physical, social, and economic access to enough, safe, and nutritious food that meets their food preferences and dietary needs for an active and healthy life. The price of food must be affordable to achieve this.
Food insecurity is not just about insufficient food production, availability and intake; it is also about the poor quality or nutritional value of the food. The detrimental effect on women and children is particularly serious, as well as on female teenagers, who on average receive less food than their male counterparts in the same households.
There are many examples of food insecurity in sub-Saharan Africa, some of them having reached catastrophic dimensions, for example in the Horn of Africa and southern Madagascar. Across 47 countries (33 in Africa) designated by the UN as least developed, the population is expected to nearly double from about 1-billion in 2017 to 1.9-billion by 2050.
Beyond 2050 Africa is expected to be the only region still experiencing “substantial population growth”, and as such, the continent’s share of the global population could rise from 17% at present to 40% by 2100.
In the Du Pont food security index, SA ranks highest in Africa at 45th, followed by Tunisia at 51st and Botswana at 52nd. Southern Africa itself is highly dependent on food from SA as most of the countries in southern Africa have limited production capacity. Countries such as Zimbabwe, Mozambique, Botswana and Namibia are considered dependent on SA for food provision and attaining food security.
In SA the whole food system starts with the primary producers, including the risks and production capacity they must master to remain profitable. To clarify further, one has to consider that the food system and food security cannot exist without funding.
In SA one of the reasons we have been so successful in the past is because in general, we own our land — and we can, therefore, collateralise it.
We use the collateral from the banks as production credit to buy inputs, source animals and basically liquidise our farming operations. The concept is called leverage and is applied in the most successful economies in the world. The bulk of the production credit is leveraged and enables production.
The first problem we’ll have if we tamper with the value of farmland is that agriculture land will become a risky asset, and where the value of land falls the implication will be that production outputs will fall by more or less the same margin. Because of the risk in the system, credit terms will go up and will have an adverse effect on food prices. We have seen this happen in several African countries in the past, including Angola and Nigeria.
Following this, divestment from the sector will occur, both inward and outward, as the negative sentiment drives down investor interest. We have already seen this happening in the industry in 2018 and 2019 because of the EWC debate and the manner in which it has been conducted.
Food production will go down because farmers will be unable to pay back their debts, causing the banks to foreclose on hundreds of farmers. Where production falls the whole food system in SA will come under severe pressure and we will very quickly move to a position where we will have to import food at export parity prices. Not only will food become unaffordable to millions of poor people, but SA will become food insecure.
When production falls, our export commitments will not be met and this, in turn, will create geopolitical food insecurity in the whole of southern Africa. Agri SA has been quite vocal in its determination to avert such a disaster, but it is in the interests of our neighbouring countries to consider the impact expropriation without compensation would have on them.
• Van Zyl is Agri SA executive director.